Gulf Coast Claims Facility New Rules
New Gulf of Mexico oil spill claim rules announced by Ken Feinberg
Gulf oil spill claims administrator Ken Feinberg has written new rules for interim and final claims, including some last-minute tweaks to address concerns from Gulf Coast state officials, as a new three-year application period for those seeking aid for losses from the Gulf of Mexico oil spill begins Wednesday.
But legal advocates on the Gulf Coast say they are concerned that Feinberg has only made the process more confusing with the release of new payment protocols and a two-page form waiving the right to sue BP and others, which claimants will have to sign before they can collect final payments.
Tuesday was the end of the three-month period to file an emergency claims application with Feinberg’s Gulf Coast Claims Facility. The firm was selected by BP and President Barack Obama to administer $20 billion set aside by the oil giant to pay damages; thus far, it has paid 125,000 claimants nearly $2 billion.
Those emergency payments have had no strings attached. Claimants have been able to collect the money without having to sign away their right to sue BP and other responsible parties in court.
But the new phase that begins Wednesday is intended to provide more finality, something Feinberg says he’s seeking sooner rather than later.
From now on, claimants, whether they have collected emergency payments or not, will still be able to file something called an “interim claim” without giving up the right to sue. But the interim claims can be filed only once per quarter and they are for losses already incurred, meaning they are not as helpful to businesses with cash flow problems.
Claimants may thus prefer instead to settle up a final claim payment, one that covers proven current and expected future losses — and one that requires the claimant to sign a covenant not to sue BP or anyone else for any losses due to the Gulf of Mexico oil spill.
The first copies of the much-anticipated waiver were circulated to political leaders and legal advocates Tuesday. The first of two pages contains blaring warnings, in capital letters, that say claimants are giving up significant rights and shouldn’t sign the forms if they don’t understand something, underlining key parts for emphasis.
“DO NOT SIGN THIS DOCUMENT UNLESS YOU UNDERSTAND AND AGREE TO ALL OF ITS TERMS,” it reads.
Craig Baab, senior fellow with the Alabama Appleseed Center for Law & Justice in Montgomery, Ala., said pro bono advocates are worried about several issues with the waivers.
For one thing, Baab said forms full of legalese will only drive bewildered spill victims into already-clogged courts.
“We’re not encouraging anyone to go to court; we agree this is the best process for resolving these claims,” Baab said. “But when the waiver is so complicated and you have people that are low-wage, low-education workers trying to make decisions about what to claim and how to claim, this is only going to cause what Feinberg said he wanted to avoid, and that’s more people going to court.”
Feinberg has received far more claims than he expected when he took over from BP in August. He has denied more than 67,000 claims outright. That’s more than one-third of all of the fully documented claims the Gulf Coast Claims Facility has reviewed so far. Baab called that “a goofy ratio” that clearly indicates “that a lot of people don’t know what they’re doing and the difficulty of this process.”
Echoing Baab’s organization, Southeast Louisiana Legal Services, the Louisiana Justice Institute and other legal advocacy groups, Mississippi Attorney General Jim Hood wrote a letter to Feinberg last week expressing concern about the lack of access for potential claimants to free legal advice.
Louisiana Attorney General Buddy Caldwell said he, too, raised concerns to Feinberg and is conferring with Hood and the other regional attorneys general to press Feinberg for more limited waivers.
Feinberg responded on Monday by assuring Hood that “any individual claimant who seeks pro bono counsel to assist him/her … will be afforded same.”
Feinberg told The Times-Picayune that he would love to have a network of trial lawyers offering free legal services to claimants. The Association of Trial Lawyers of America came to him and established a service of 1,500 pro-bono advocates for claimants to the 9/11 victim compensation fund when Feinberg administered it after the 2001 terror attacks. But, Feinberg said, national legal organizations have not stepped up to the plate this time.
Baab said that may be true, but added that “25 of us on the coast went to him with a proposal this summer and he said we’ll just get one pro bono lawyer per state.”
A report on the 9/11 claims process found that three-quarters of all claimants had legal representation. Feinberg said that during the emergency claims process, fewer than 50 of more than 400,000 claimants asked for free legal service, and they were all connected with lawyers. Still, Feinberg admitted that interest in legal representation might spike after claimants seek final payment and see the waiver forms, and he promised to “watch it very carefully.”
One part of the waiver form that caught Baab’s ire is a provision stating that a claimant gives up the right to sue BP and other responsible parties, not just for him or herself, but for “affiliates,” too — including his or her spouse, parents and heirs. The form also applies to commercial claimants, and they are asked to sign away the rights of their partners, shareholders and others to sue, as well.
Feinberg said that wasn’t intended to prevent relatives from pursuing separate claims, only to ensure that people sharing property, such as a husband and wife, can’t turn around and sue for the same basic claim for which they already accepted a final payment from GCCF. Baab called that explanation “crap,” saying Feinberg could easily tighten the language so that it isn’t so broad.
Hood also criticized Feinberg for “a lack of transparency in the process,” and Feinberg, as he has in the past, acknowledged that GCCF has not communicated well with applicants when denying claims or paying less than requested.
Feinberg will attempt to address that in the new process: A draft of the final payment protocols from Nov. 1, obtained by The Times-Picayune, says only that it will send determinations of payments in writing, while the final protocol completed Monday expressly promises to send claimants written explanations of why they were denied or got less than they claimed.
At Hood’s request, Feinberg added a limited internal appeals process for applicants who dispute their interim or final payment determinations. A claimant also has the right to appeal GCCF’s payment offer to the Coast Guard or to the courts before accepting a final payment.
Feinberg will select a “distinguished” retired judge or law professor to appoint several appeal judges. Claimants will then be able to appeal their final claim determination if it is larger than $250,000. The new protocols also allow BP to appeal any payments of greater than $500,000.
Feinberg has resisted providing a formal appeals process during the emergency payment period, saying it would slow the process down when claimants already have the right to sue in court or seek redress from the Coast Guard. Feinberg said a handful of emergency payments were reviewed by the Coast Guard.
Final payment offers are good for 90 days.